Exporting Bad IP Laws Through Free Trade Agreements

South Korea has just signed a bilateral free trade agreement with the US that will put severe restrictions on its ability to innovate. This is exactly the kind of arrangement that James Surowiecki, author of The Wisdom of Crowds, wrote about in the May 14 issue of the New Yorker magazine.

Recent US trade agreements with the developing world, says Surowiecki, do more than regulate trade and tariffs—they export stringent US copyright and patent laws as well:

The U.S., in its negotiations, insists on a one-size-fits-all approach: stronger rules are better. But accepting a diverse range of I.P. rules makes more sense, especially in light of the different economic challenges that developing and developed countries face? [D]eveloping countries, being poorer, obviously have more to gain from shorter patent terms for foreign innovations, since that facilitates the spread of new technology and the diffusion of ideas. Tellingly, this is the approach the U.S. takes when it comes to labor standards, arguing that we shouldn't impose developed-country standards on developing countries. But in the case of intellectual property the government?s position is exactly the opposite. The only difference, it seems, is whose interests are at stake.

In exchange for the promise of increased access to US agricultural and textile markets, US trading partners are being required to rewrite their IP laws. For instance, the last nine US free trade agreements signed since 2002 have required trading partners to adopt the US-EU copyright term of life of the creator plus 70 years, create laws banning the circumvention of DRM (or technological protection measures) modeled very precisely on the controversial DMCA, and to treat temporary reproductions of copyrighted works (such as in computer memory) as copyright infringement. The FTAs also require trading partners to broaden their patent laws. The Central American Free Trade Agreement also required extended protection of test data, seemingly directed at precluding registration of generic pharmaceuticals.

Unfortunately, the FTAs have efficiently harmonized US normative standards without exporting the accompanying exceptions and limitations in US law that provide a crucial balance between private and public interests. As a result, the FTAs require US trading partners to adopt lop-sided legal regimes that do not serve the best interests of their citizens. Lop-sided regimes are likely to increase the costs of accessing information needed for development, and drive up the prices of desperately needed medicines in poor countries.

Surowieki's piece comes at a very interesting time. In 2002, Congress voted by a slim margin to re-grant fast track authority to the Office of the US Trade Representative (USTR). It's the fast track authority under the Trade Promotion Act that allows the USTR to negotiate these agreements and speed them through Congress on an expedited timetable with an up-or-down vote. However, that authority will expire on June 30 of this year, unless it is renewed by Congress—something that seems increasingly likely, despite the series of highly controversial FTAs, after the recent Bipartisan Deal on labor, environmental and patent issues in US trade policy.

We will be posting more detailed analysis of the South Korea—US free trade agreement's IP provisions shortly.

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